With summer in full swing barbecues are being fired up. Friends and family get together, stories are told and advice is dished out, some wanted, some not. But you should be wary of basing your investment decisions purely on stories shared around the barbecue. Getting financial advice from friends and family can be a recipe for disaster.

At Allan Gray we believe there are two ways to improve investment outcomes: the first is getting the right financial advice and the second making the right investments.


People love to give advice, especially those closest to us. While we are usually able to sift out what is irrelevant to us, it can be difficult to resist taking financial advice from those we trust, especially if they have done well for themselves.

Strangely, it is highly unlikely that we would take medical advice from these same people, certainly not without a second opinion from a doctor. Yet when it’s our financial health, our life savings, on the line we seem to be more than happy to take advice those around us, despite a bad outcome being just as detrimental for our financial health as a poor health diagnosis is for our physical health!

Before acting on investment advice from your social circle, you need to carefully consider what you are trying to achieve on the one hand and the real value of the potential investment on the other. This is where most advice given out at social events falls flat. A good financial plan is holistic.  It takes into consideration your objectives, your tolerance to risk, the length of time you expect to hold the investments and much more.

What are the benefits of financial advice?

Financial advice can help you identify your financial goals and develop strategies to achieve your goals.  It can also help you better manage your money, ensure you’re taking advantage of tax efficiencies and planning for your future.   It’s well documented that the retirement gap is real and most Australians are concerned that they won’t have enough money to retire, or that they will run out during retirement. The only way to remedy this is to plan now.

This year, Sunsuper released its value of advice report in conjunction with Core Data, which put dollar values on the benefits of financial advice for three couples at different life stages. You can read a summary here.

Other research, summarised here, found some ancillary benefits to financial planning, including the fact that individuals who undertook financial advice had higher levels of peace of mind (21%) and were less likely to have arguments with loved ones.

On the other hand, those who didn’t receive financial advice were 22% more likely to have their sleep disrupted due to money concerns and 15% more likely to feel stress and anxiety.

Seek good independent advice

Many investors are reluctant to pay for professional advice, but it can be more costly to pursue free tips from someone who is not qualified to give financial advice. A good independent financial adviser can help you select an investment that is right for your circumstances, as well as help you manage your behaviour while you are invested to improve your investment outcomes. A key consideration in selecting an adviser is trust. In this instance, a suitable starting point in looking for one is to ask for a recommendation from someone whose judgement you value.

The Financial Planning Association (FPA) of Australia, suggests that the sure sign of a good financial planner is that they “don’t rush you, carefully listen to you and clearly explain where they can add value and where they can’t.” To find a Certified Financial Planner ® professional or FPA Professional Practice you can use the FPA’s Find a Planner tool by clicking here.